Imperial secures 95.8% of Altadis, bids for Logista

JasonSinclair

(Recasts lede, adds detail, background)

MADRID (MarketWatch) -- Imperial Tobacco Group PLC
ITY
said Friday it secured 95.8% of Altadis SA (ALT.MC) and moved to take full control of the French-Spanish company's profitable distribution unit Logista SA (LOG.MC), paving the way for one of the largest takeovers in the tobacco industry.

The EUR12.6 billion cash takeover of Altadis will allow U.K.-based Imperial Tobacco, known for its Davidoff and West brand cigarettes, to close the gap on rivals Altria Group Inc.'s
MO, -2.79%
Philip Morris business, Japan Tobacco Inc. (2914.TO) and British American Tobacco PLC
BTI, -1.59%

Altadis manufactures Fortune, Gitanes and Ducados cigarettes and is also the world's leading cigar distributor through its 50-50 venture with the Cuban state-owned cigar company Habanos.

Imperial Tobacco also unveiled an EUR900 million cash offer for about 40% of Logista, which distributes cigarettes, retail goods, newspapers and magazines across key European tobacco markets such as Spain, France and Italy with annual sales of over EUR800 million. Altadis controls around 59.6% of Logista.

Imperial Tobacco's Chief Executive Gareth Davis also said Friday that the current priority of the company is the integration of Altadis, although he didn't rule out further acquisitions.

"There are still a number of interesting [acquisition] opportunities out there, perhaps not on the same scale as Altadis," Davis said on a conference call.

In a research note, Morgan Stanley said the takeover creates value through revenue synergies, positioning Imperial to compete well with chief rival British American Tobacco.

At 1035 GMT, Imperial Tobacco shares were up 4%, or 99 pence at 2319 pence, outperforming a higher London market. In Madrid, Altadis traded up EUR0.17, or 0.3%, to EUR49.98.

Shares in Logista had been suspended prior to the news. They rose when trading resumed and at 1039 GMT were up 5.1%, or EUR2.55 higher, at EUR52.55.

Imperial's EUR52.5 per share bid for the rest of Logista was expected by market watchers. Citigroup said earlier this week that Imperial could buy in Logista's minority shareholders "with the intention of selling the business in a year or two."

The approach from Imperial last year took place at a time of weakness for Altadis, which has suffered from a steep decline in profits and has been forced to cut costs as core Spanish and French cigarette markets have been hard hit by tougher anti-tobacco regulations, cutthroat price competition and higher taxes.

Imperial has said it plans to delist Altadis from Spanish and French stock markets following the takeover.

Company Web site: www.imperial-tobacco.com/

www.altadis.com

(Rod Stone in London and Santiago Perez in Madrid contributed to this article.)

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